Morpheus: Classic story of tech strategy gone wrong

Among file sharing programs, one strange menage a trois stands out: Morpheus, KaZaA, Grokster. All three run essentially the same software, owned by KaZaA. Last week something happened to Morpheus — it’s not clear what. According to Slashdot, the ownership of Morpheus (Music City) has claimed that individuals “launched a DOS attack and tampered with the morpheus network in order to disallow logons to the FastTrack P2P filesharing network through the client. ” According to this message, KaZaA sold out to another outfit and started kicking the Morpheus clients off the network.

Where’s the cautionary tale here? Well, there are two parameters that determine how well you can capture the value you create (i.e., stay in business). Is your product’s uniqueness easy or hard to maintain? Do you hold the complementary assets you need to realize that product’s value tightly or loosely? Well, let’s see. Morpheus licensed its technology wholesale, so uniqueness was hard to maintain. And their network was connected to its competitors (all three P2P clients connected to the same big FastTrack network). I guess they didn’t have too tight a control over their complementary assets. So how was Morpheus going to capture any value??? Somewhere, though, someone thought they were a good idea…more…